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Creative Destruction of Finance

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We've seen the disruption of Kodak, Blockbuster, the Yellow Pages and the music industry. Will the finance sector be next?

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Creative Destruction of Finance

  1. 1. The Creative Destruction of Finance Paul Barter, @barterpaul, paul.barter@t4g.com VP Research at T4G, Tech Strategy Prof at Schulich, Venture Advisor at MaRS
  2. 2. *not a real book, yet.
  3. 3. Late ’20s Good health Good credit Entrepreneurial No real assets Late ’50s Good health Good credit Preparing to retire Non-trivial assets Imagine 2 People (from your perspective)
  4. 4. Abstracted, systematized, and centralized trust. Giovanni di Bicci de' Medici What is a Bank?
  5. 5. Whose trust?
  6. 6. Flow of cash
  7. 7. This brings us to today.
  8. 8. Capital is constrained Basic assumption of finance
  9. 9. ‘The world will be awash in nearly one quadrillion $ of cheap capital by end of decade’
  10. 10. Basic assumption of finance Incumbents are untouchable
  11. 11. “There’s a big role for Silicon Valley-style scorched earth entrepreneurship on Wall Street right now, and the people most likely to innovate are newcomers to the industry who have no real stake in the portions of it that need scorching”
  12. 12. “Banks, in particular, seem beset by boredom, unenthusiastic about actually making commercial loans, as many small and medium sized businesses will attest. This reluctance is likely to erode banks' franchise permanently, as scores of alternative lending entities are being created to fill the void.“
  13. 13. Should we take these competitors seriously?
  14. 14. General-Purpose Technologies (GPTs)
  15. 15. The next fortune. What’s a general purpose technology?
  16. 16. What’s going on? Why does it matter?
  17. 17. 1. Invention 2. Expansion 3. Innovation
  18. 18. Information & Communication Technology (ICT)
  19. 19. Invention Expansion Innovation
  20. 20. * *not a real book, yet.
  21. 21. What are some Financial Services? Money transfer & Payments Loans & Deposits Investments & Returns Insurance
  22. 22. Payments & Transfers
  23. 23. “PayPal could quite quickly become the largest consumer bank in the world. You just need to take away the reasons that people remove money from the PayPal account. And then it’s like, cool, why not just use it for everything?”
  24. 24. Loans & Deposits
  25. 25. Which narrative should you believe?
  26. 26. Investments and Returns
  27. 27. Insurance
  28. 28. Where is there disruptive innovation? Loans & Deposits Money transfer & Payments Investments & Returns Insurance
  29. 29. What about the giants?
  30. 30. Your margin is my opportunity.
  31. 31. 425,000,000 800,000,000
  32. 32. What about the giants?
  33. 33. $60bn$160bn
  34. 34. What if…
  35. 35. + +
  36. 36. Flow of cash
  37. 37. Where is there a real threat? Loans & Deposits Money transfer & Payments Investments & Returns Insurance
  38. 38. How can incumbents thrive?
  39. 39. Track the competition.
  40. 40. Accelerate
  41. 41. Be everywhere.
  42. 42. Test, track, and iterate.
  43. 43. And finally, don’t forget:
  44. 44. Go back to basics.
  45. 45. Shoot for the moon.

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